Deferred Compensation Plan Vs 401k In North Carolina
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Multi-State
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US-00418BG
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Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a date after which the income is actually earned. A Deferred Compensation Agreement is a contractual agreement in which an employee (or independent contractor) agrees to be paid in a future year for services rendered. Deferred compensation payments generally commence upon termination of employment (e.g., retirement) or death or disability before retirement. These agreements are often geared toward anticipated retirement in order to provide cash payments to the retiree and to defer taxation to a year when the recipient is in a lower bracket. Although the employer's contractual obligation to pay the deferred compensation is typically unsecured, the obligation still constitutes a contractual promise.
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The NC 401(k) and NC 457 Plans are exclusively available to public servants like you and provide low-cost and diverse investment options. The State offers low-fee, tax-deferred programs to provide a way to save money to supplement retirement income.The employee component is similar to the State's § 401(k) and § 457 plans and allows the employee to voluntarily contribute to the Plan. The 457(b) is a supplemental retirement plan that allows employees to set aside payroll-deducted contributions on a pre or after-tax basis. Complete an NC 457 Deferred Compensation. Plan Enrollment Form (forms and instructions are available on the website). 3. A 457(b) plan is a tax-deferred retirement savings plan. Funds are withdrawn from an employee's income without being taxed and are only taxed upon withdrawal.